SCO Covered Call Strategy
SCO (ProShares - UltraShort Bloomberg Crude Oil), in the Financial Services sector, (Asset Management - Leveraged industry), listed on AMEX.
ProShares UltraShort Bloomberg Crude Oil is an investment vehicle engineered to deliver daily returns that are twice the inverse of the Bloomberg Commodity Balanced WTI Crude Oil Index's daily performance. This means that, before accounting for fees and expenses, the fund aims to move in the opposite direction of the index's daily changes, at a magnitude of 200%.
SCO (ProShares - UltraShort Bloomberg Crude Oil) trades in the Financial Services sector, specifically Asset Management - Leveraged, with a market capitalization of approximately $80.6M, a beta of -2.33 versus the broader market, a 52-week range of 22.84-84.16, average daily share volume of 12.9M, a public-listing history dating back to 2008. These structural characteristics shape how SCO etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of -2.33 indicates SCO has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure.
What is a covered call on SCO?
A covered call pairs long stock with a short out-of-the-money call, collecting premium and capping upside above the short strike in exchange for income.
Current SCO snapshot
As of June 30, 2026, spot at $35.03, ATM IV 65.21%, IV rank 18.07%, expected move 18.69%. The covered call on SCO below is built from the same end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 31-day expiry.
Why this covered call structure on SCO specifically: SCO IV at 65.21% is on the cheap side of its 1-year range, which means a premium-selling SCO covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 18.69% (roughly $6.55 on the underlying). The 31-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated SCO expiries trade a higher absolute premium for lower per-day decay. Position sizing on SCO should anchor to the underlying notional of $35.03 per share and to the trader's directional view on SCO etf.
SCO covered call setup
The SCO covered call below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With SCO near $35.03, the first option leg uses a $37.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed SCO chain at a 31-day expiry; the cross-strike IV skew is reflected directly in the per-leg values rather than approximated. Quantity sizing assumes one contract per option leg (or 100 SCO shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $35.03 | long |
| Sell 1 | Call | $37.00 | $1.68 |
SCO covered call risk and reward
- Net Premium / Debit
- -$3,335.50
- Max Profit (per contract)
- $364.50
- Max Loss (per contract)
- -$3,334.50
- Breakeven(s)
- $33.36
- Risk / Reward Ratio
- 0.109
Max profit equals short-strike minus cost basis plus premium times 100; max loss is cost basis minus premium (at zero). Breakeven is cost basis minus premium.
SCO covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on SCO. Each row is one sampled price point from the computed payoff curve; the full curve uses 200 price points internally before being summarized into 10 rows here.
| Underlying Price | % From Spot | P&L at Expiration |
|---|---|---|
| $0.01 | -100.0% | -$3,334.50 |
| $7.75 | -77.9% | -$2,560.08 |
| $15.50 | -55.8% | -$1,785.66 |
| $23.24 | -33.6% | -$1,011.23 |
| $30.99 | -11.5% | -$236.81 |
| $38.73 | +10.6% | +$364.50 |
| $46.48 | +32.7% | +$364.50 |
| $54.22 | +54.8% | +$364.50 |
| $61.96 | +76.9% | +$364.50 |
| $69.71 | +99.0% | +$364.50 |
When traders use covered call on SCO
Covered calls on SCO are an income strategy run on existing SCO etf positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
SCO thesis for this covered call
The market-implied 1-standard-deviation range for SCO extends from approximately $28.48 on the downside to $41.58 on the upside. A SCO covered call collects premium on an existing long SCO position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether SCO will breach that level within the expiration window. Current SCO IV rank near 18.07% sits in the lower third of its 1-year distribution, where IV often re-expands toward the mean; this favors premium-buying structures and disadvantages premium-selling structures on SCO at 65.21%. As a Financial Services name, SCO options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to SCO-specific events.
SCO covered call positions are structurally neutral to slightly bullish; the modeled P&L assumes European-style exercise at expiration and ignores early assignment, transaction costs, dividends paid before expiry on the stock leg (when present), and the bid-ask spread on the listed chain. SCO positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move SCO alongside the broader basket even when SCO-specific fundamentals are unchanged. Short-premium structures like a covered call on SCO carry tail risk when realized volatility exceeds the implied move; review historical SCO earnings reactions and macro stress periods before sizing. Always rebuild the position from current SCO chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on SCO?
- A covered call on SCO is the covered call strategy applied to SCO (etf). The strategy is structurally neutral to slightly bullish: A covered call pairs long stock with a short out-of-the-money call, collecting premium and capping upside above the short strike in exchange for income. With SCO etf trading near $35.03, the strikes shown on this page are snapped to the nearest listed SCO chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are SCO covered call max profit and max loss calculated?
- Max profit equals short-strike minus cost basis plus premium times 100; max loss is cost basis minus premium (at zero). Breakeven is cost basis minus premium. For the SCO covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 65.21%), the computed maximum profit is $364.50 per contract and the computed maximum loss is -$3,334.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a SCO covered call?
- The breakeven for the SCO covered call priced on this page is roughly $33.36 at expiration, derived from end-of-day chain premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The current SCO market-implied 1-standard-deviation expected move is approximately 18.69%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a covered call on SCO?
- Covered calls on SCO are an income strategy run on existing SCO etf positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
- How does current SCO implied volatility affect this covered call?
- SCO ATM IV is at 65.21% with IV rank near 18.07%, which is on the low end of its 1-year range. Premium-buying structures (long call, long put, debit spreads) are relatively cheap in this regime; premium-selling structures collect less credit per unit risk.